As IT service providers increasingly partner with artificial intelligence vendors and automation providers, develop their own proprietary automation toolsets, or make targeted acquisitions in the AI and automation space, outsourcing customers increasingly can pursue intelligent automation in their outsourcing deals.

There are a number of considerations for IT and business leaders when deciding which providers to work within the area of automation-enabled transformation. “As customers consider their own adoption of digital business models they need to consider how they are going to accomplish the significant business model change that these new service models require,” says Peter Bendor-Samuel, CEO of outsourcing research firm Everest Research. “These changes are far bigger and deeper than those they faced when they adopted labor arbitrage [engagements],” says Bendor-Samuel.

At the outset, companies need to be clear about what they want to accomplish by incorporating intelligent automation into their outsourcing arrangements. “First—and I can’t stress this enough — automation and AI are not about the robot,” says Phil Fersht, CEO of outsourcing analyst and consultancy firm HfS Research. “Too many enterprises are watching demos and trying to evaluate one tool vs. another, based on what the vendors are telling them. The most important question is: what form of enterprise transformation are you trying to enable and achieve?”

Know what you need and hope to achieve with automation

Having a clear understanding of what the business hopes to achieve with cognitive capabilities or automation is critical to putting provider proposals in context. “Some automation and AI tools vendors will tell you that speed is of the essence. Others will tell you enterprise-grade and control and security is key,” says Fersht. “They are all right—but right in specific situations.”

Existing customers of a provider who announces an acquisition or partnership in this space need to make sure they have the contractual flexibility and relationship governance in place to benefit from these emerging capabilities, says David Borowski, director with outsourcing consultancy Pace Harmon.

But working with an incumbent provider may not necessarily be the best bet. “As automation and AI become more embedded in the outsourcing model, the difference between new style of automation-rich intelligent operations and offshore-centric traditional operations is growing,” says Fersht.

“[Most] existing providers are conflicted as their current arbitrage-first delivery models are threatened by these new digital service models. This poses a dilemma as the incumbent providers understand the existing business but have conflicts of interest in driving toward the new business models,” says Bendor-Samuel. “Further more they often lack the digital expertise and transformation chops to be the best partner to take the client on the journey.” As a result, many enterprises are inking deals new digital firms as legacy providers reposition themselves, Bendor-Samuel adds.

Certain technical requirements will narrow the list of options for many clients. Companies looking to automate in areas that involve sensitive data or seeking to limit integration and ongoing maintenance effort will find just a few providers capable of meeting their needs, says Fersht.

As with any significant IT transformation, talking to those who have gone down this road before is important. “I strongly suggest that clients get input from customer references, both to understand peer experiences and to prove out deployment at scale,” says Fersht.

Outsourcing customers should also consider the governance and service level metrics implications of these new types of outsourcing arrangements. “As the services penetration changes and the solution characteristics change, there is also a growing question about how to measure performance and success, and create a commercial relationship with the provider to equitably share in that success.”